DEFIANCE, Ohio, July 18, 2024 (GLOBE NEWSWIRE) -- SB Financial Group, Inc. (NASDAQ:SBFG) ("SB Financial" or the "Company"), a diversified financial services company providing full-service community banking, mortgage banking, wealth management, private client and title insurance services today reported earnings for the second quarter ended June 30, 2024. Second Quarter 2024 Highlights compared to the second quarter of the prior year: Net income of $3.1 million, up 1.2 percent and in line with the same quarter last year. Diluted Earnings Per Share ("EPS") increased to $0.47 or 6.8% from $0.44; Net interest income totaled $9.7 million, a 1.7 percent decrease from the $9.8 million; Loan growth increased to $1.01 billion, up by $20.6 million or 2.1 percent from the $984.8 million; Return on Average Assets ("ROAA") increased to 0.93%, up 2 basis points from the previous year, while Return on Average Equity ("ROAE") declined slightly to 10.16%, down 16 basis points from 10.32%. Six Months Ended June 30, 2024 Highlights compared to the same period of the prior year: Mortgage Banking Revenue increased to $3.4 million, up by 22.8 percent from $2.8 million. Trailing Twelve Months Ended June 30, 2024 Highlights compared to the prior year: EPS was $1.78 for the twelve months ended June 2024, an increase of 1.1 percent from the prior twelve months of $1.76. Total deposits were $1.12 billion at the end of June 2024, representing an increase of 4.1 percent from $1.07 billion at the end of June 2023. Mortgage origination volume was $218.8 million for the trailing twelve months, with the servicing portfolio of $1.39 billion, which increased by 2.7 percent.  Earnings Highlights Three Months Ended   Six Months Ended   ($ in thousands, except per share & ratios) Jun. 2024 Jun. 2023 % Change   Jun. 2024 Jun. 2023 % Change   Operating revenue $ 14,045   $ 14,190   -1.0 %   $ 27,176   $ 28,180   -3.6 %   Interest income   15,654     14,406   8.7 %     30,954     28,230   9.6 %   Interest expense   5,995     4,577   31.0 %     12,115     8,077   50.0 %   Net interest income   9,659     9,829   -1.7 %     18,839     20,153   -6.5 %   Provision for credit losses   -     145   -100.0 %     -     395   0.0 %   Noninterest income   4,386     4,361   0.6 %     8,337     8,027   3.9 %   Noninterest expense   10,671     10,339   3.2 %     20,953     21,112   -0.8 %   Net income   3,113     3,075   1.2 %     5,481     5,525   -0.8 %   Earnings per diluted share   0.47     0.44   6.8 %     0.82     0.79   3.8 %   Return on average assets   0.93 %   0.91 % 2.2 %     0.82 %   0.82 % 0.0 %   Return on average equity   10.16 %   10.32 % -1.6 %     9.02 %   9.01 % 0.1 %   "We demonstrated solid execution and financial stability in the quarter ended June 30, 2024," stated Mark A. Klein, Chairman, President, and CEO. "We maintained a net income of $3.1 million, a testament to our operational resilience and our relentless focus on profitability. Notably, our diluted earnings per share increased by 6.8% to $0.47, reflecting our unwavering commitment to delivering shareholder value amidst economic uncertainties." "Our loan portfolio expanded to $1.01 billion, an increase of $20.6 million, showcasing our disciplined growth strategy and the strong confidence our clients place in our partnership. Despite ongoing market challenges, our deposit base grew by $44.0 million or 4.1% year-over-year to $1.12 billion, underscoring our margin oversight and the sustained trust of our customers. We continue to maintain a conservative risk profile, with peer leading asset quality and no loan charge-offs," added Mr. Klein. RESULTS OF OPERATIONS Consolidated Revenue In the second quarter of 2024, SB Financial Group demonstrated operational resilience with a slight year-over-year decline in operating revenue of only 1.0%, coupled with an increase of 7.0% from the preceding quarter. Despite a 1.7% decrease in net interest income—largely attributable to elevated deposit costs—our financial management mitigated the impact, resulting in a nominal 5 basis point reduction in our net interest margin when compared to the second quarter of 2023. Noninterest income recorded a 0.6% increase over the same quarter last year, fueled by a substantial 20.9% surge in gains from the sale of mortgages and OMSR, alongside a 14.4% increase in mortgage loan servicing fees. Consistent customer service fees further improved our solid revenue base. However, we noted variances in performance across other noninterest income areas, such as wealth management and title insurance services, which saw declines. For the first time in over 2 years, interest expenses decreased on a linked quarter basis, highlighting the stabilization of funding costs. Mortgage Loan Business In the second quarter of 2024, SB Financial Group's mortgage loan business recorded a 14.9% increase in loan originations, reaching $75.1 million from $65.4 million in the corresponding period last year. This notable growth underscores some strengthening in the housing market and hopefully signals broader positive economic trends. Mortgage sales demonstrated significant expansion this quarter, reaching $55.8 million, or 74% of total originations. This higher level of sales volume, marked a 16.5% year-over-year increase from $47.9 million, underscores our successful market penetration and strategic positioning, particularly in a competitive lending environment. Our mortgage banking net revenue saw an increase to $1.8 million, up 18.8% from the previous year, reflecting our strong operational efficiency. Additionally, the mortgage servicing portfolio expanded by 2.7%, reaching $1.39 billion, which reinforces our dedication to sustainable growth and enhanced servicing capabilities. Mr. Klein, Chairman, President, and CEO of SB Financial Group, stated, "This quarter has showcased improved efficiency in our mortgage operations. Although our results slightly missed our internal targets, the shortfall primarily reflects the heightened competitiveness and shifting dynamics within the mortgage market. Despite these challenges, our proactive measures, most notably the expansion of our origination teams, have positioned us to capitalize on market opportunities and maintain our growth momentum."  Mortgage Banking               ($ in thousands) Jun. 2024 Mar. 2024 Dec. 2023 Sep. 2023 Jun. 2023   Prior Year Growth Mortgage originations $ 75,110   $ 42,912   $ 39,566   $ 61,200   $ 65,387     $ 9,723   Mortgage sales   55,835     36,623     33,362     54,085     47,933       7,902   Mortgage servicing portfolio   1,389,805     1,371,713     1,366,667     1,367,209     1,353,904       35,901   Mortgage servicing rights   14,548     14,191     13,906     13,893     13,723       825                                   Revenue               Loan servicing fees   862     855     855     850     844       18   OMSR amortization   (335 )   (273 )   (282 )   (334 )   (334 )     (1 ) Net administrative fees   527     582     573     516     510       17   OMSR valuation adjustment   38     181     (12 )   (78 )   (16 )     54   Net loan servicing fees   565     763     561     438     494       71   Gain on sale of mortgages   1,277     781     747     1,207     1,056       221   Mortgage banking revenue, net $ 1,842   $ 1,544   $ 1,308   $ 1,645   $ 1,550     $ 292   Noninterest Income and Noninterest Expense For the second quarter of 2024, noninterest income at SB Financial Group increased slightly to $4.4 million compared to the prior year quarter, marking a modest increase of 0.6%. This growth is primarily attributable to strategic initiatives, including enhanced gain-on-sale yields from mortgage loans and higher recapture of servicing rights, which significantly contributed to our financial performance. Additionally, customer service fees rose marginally, reinforcing our attention in this area. Noninterest expenses for the second quarter were reported at $10.7 million, reflecting a 3.2% increase from the previous year's $10.3 million, as higher commission costs from mortgage volume drove compensation higher.  Noninterest Income/Noninterest Expense                   ($ in thousands, except ratios) Jun. 2024 Mar. 2024 Dec. 2023 Sep. 2023 Jun. 2023   Prior Year Growth Noninterest Income (NII) $ 4,386   $ 3,951   $ 5,531   $ 4,163   $ 4,361     $ 25   NII / Total Revenue   31.5 %   30.1 %   36.6 %   30.4 %   30.7 %     0.8 % NII / Average Assets   1.3 %   1.2 %   1.7 %   1.2 %   1.3 %     0.0 % Total Revenue Growth   -0.6 %   -6.1 %   3.4 %   -5.3 %   -0.5 %     -0.6 %                 Noninterest Expense (NIE) $ 10,671   $ 10,282   $ 10,369   $ 10,481   $ 10,339     $ 332   Efficiency Ratio   75.9 %   78.2 %   68.4 %   79.0 %   72.7 %     3.2 % NIE / Average Assets   3.2 %   3.1 %   3.1 %   3.1 %   3.1 %     0.1 % Net Noninterest Expense/Avg. Assets   -1.9 %   -1.9 %   -1.4 %   -1.9 %   -1.8 %     -0.1 % Total Expense Growth   3.2 %   -4.6 %   1.0 %   0.9 %   -4.3 %     3.2 % Mr. Klein commented on the financial performance, stating, "Our noninterest income has shown consistent resilience, supported by significant gains from mortgage and mortgage servicing fees, reflecting our agility and expertise in capitalizing on favorable market conditions. Regarding expenses, the increase this quarter is driven by revenue generation activities. Our focus remains on optimizing our cost structure and ensuring operational efficiency, which is paramount in delivering sustained value to our stakeholders." Balance Sheet As of June 30, 2024, SB Financial Group has continued to demonstrate financial stability, with total assets reporting a marginal increase to $1.34 billion, up by 0.06% year-over-year. Our loan portfolio again crossed the $1 billion threshold and now stands at $1.01 billion, marking an increase of $20.6 million or 2.1% compared to the previous year. This growth is indicative of our effective lending practices in a dynamic economic landscape. Furthermore, an increase in cash and cash equivalents has provided enhanced liquidity, further strengthening our financial position. Shareholders' equity experienced a slight quarterly expansion of 1.4% to $125.5 million compared to the linked quarter and also showed positive growth of 6.6% on a year-over-year basis. This growth underscores our consistent efforts to enhance shareholder value amidst fluctuating market conditions. "In 2024, we have maintained a disciplined and proactive approach to our growth and capital management, aligning closely with our objectives. Our ability to sustain and grow our loan portfolio, even in a highly competitive market, demonstrates the resilience of our business model and the effectiveness of our relationship-driven lending practices. Moreover, the year-over-year increase in shareholders' equity highlights our continued commitment to driving shareholder value. We remain poised to leverage any opportunities that will fortify our financial position and ensure long-term prosperity for our stakeholders," commented Mr. Klein.  Loan Balances             ($ in thousands, except ratios) Jun. 2024 Mar. 2024 Dec. 2023 Sep. 2023 Jun. 2023 Annual Growth Commercial $ 123,287   $ 120,016   $ 126,716   $ 120,325   $ 123,226   $ 61   % of Total   12.3 %   12.1 %   12.7 %   12.2 %   12.5 %   0.0 % Commercial RE   434,967     429,362     424,041     421,736     417,412     17,555   % of Total   43.3 %   43.3 %   42.4 %   42.6 %   42.4 %   4.2 % Agriculture   64,329     62,365     65,659     60,928     58,222     6,107   % of Total   6.4 %   6.3 %   6.6 %   6.2 %   5.9 %   10.5 % Residential RE   316,233     314,668     318,123     320,306     321,365     (5,132 ) % of Total   31.5 %   31.7 %   31.8 %   32.4 %   32.6 %   -1.6 % Consumer & Other   66,574     65,141     65,673     65,726     64,599     1,975   % of Total   6.6 %   6.6 %   6.6 %   6.6 %   6.6 %   3.1 % Total Loans $ 1,005,390   $ 991,552   $ 1,000,212   $ 989,021   $ 984,824   $ 20,566   Total Growth Percentage                 2.1 %                             Deposit Balances             ($ in thousands, except ratios) Jun. 2024 Mar. 2024 Dec. 2023 Sep. 2023 Jun. 2023 Annual Growth Non-Int DDA $ 208,244   $ 219,395   $ 228,713   $ 224,182   $ 218,411   $ (10,167 ) % of Total   18.7 %   19.7 %   21.4 %   20.7 %   20.4 %   -4.7 % Interest DDA   190,857     169,171     166,413     174,729     170,282     20,575   % of Total   17.1 %   15.2 %   15.5 %   16.1 %   15.9 %   12.1 % Savings   231,855     244,157     216,965     226,077     225,065     6,790   % of Total   20.8 %   21.9 %   20.3 %   20.8 %   21.0 %   3.0 % Money Market   225,650     221,362     202,605     216,565     217,681     7,969   % of Total   20.2 %   19.9 %   18.9 %   20.0 %   20.3 %   3.7 % Time Deposits   258,582     258,257     255,509     243,766     239,717     18,865   % of Total   23.2 %   23.2 %   23.9 %   22.5 %   22.4 %   7.9 % Total Deposits $ 1,115,188   $ 1,112,342   $ 1,070,205   $ 1,085,319   $ 1,071,156   $ 44,032   Total Growth Percentage                 4.1 % Asset Quality SB Financial Group's dedication to maintaining exceptional asset quality remains evident through the second quarter of 2024. As of June 2024, nonperforming loans constituted 0.47% of total loans, reflecting an increase from 0.25% in the previous quarter. Despite the slight increase in nonperforming loans to total loans, our criticized loan categories are down nearly 23% compared to the prior year and our reserve coverage remains above 325%. Moreover, the net loan charge-offs to average loans ratio, annualized at -0.01%, highlights our effective management of loan repayments and the high quality of our credit portfolio. These metrics reinforce our reputation for rigorous risk management and credit excellence. Mark A. Klein, Chairman, President, and CEO of SB Financial, commented, "Our second-quarter performance underscores our unwavering commitment to asset quality. Despite a slight increase in nonperforming loans, our substantial allowance for credit losses and effective loan management practices reflects our measured approach to risk management. We are steadfast in ensuring the strength and stability of our loan portfolio, even in the face of economic fluctuations."                Nonperforming Assets           Annual Change ($ in thousands, except ratios) Jun. 2024 Mar. 2024 Dec. 2023 Sep. 2023 Jun. 2023 Commercial & Agriculture $ 2,781   $ 897   $ 748   $ 717   $ 170   $ 2,611   % of Total Com./Ag. loans   1.48 %   0.49 %   0.39 %   0.40 %   0.09 %   1535.9 % Commercial RE   475     49     168     222     192     283   % of Total CRE loans   0.11 %   0.01 %   0.04 %   0.05 %   0.05 %   147.4 % Residential RE   1,247     1,295     1,690     2,182     2,266     (1,019 ) % of Total Res. RE loans   0.39 %   0.41 %   0.53 %   0.68 %   0.71 %   -45.0 % Consumer & Other   231     193     212     208     282     (51 ) % of Total Con./Oth. loans   0.35 %   0.30 %   0.32 %   0.32 %   0.44 %   -18.1 % Total Nonaccruing Loans   4,734     2,434     2,818     3,329     2,910     1,824   % of Total loans   0.47 %   0.25 %   0.28 %   0.34 %   0.30 %   62.7 % Foreclosed Assets and Other Assets   510     510     511     629     625     (115 ) Total Change (%)             -18.4 % Total Nonperforming Assets $ 5,244   $ 2,944   $ 3,329   $ 3,958   $ 3,535   $ 1,709   % of Total assets   0.39 %   0.22 %   0.25 %   0.30 %   0.26 %   48.35 %               Webcast and Conference Call The Company will hold the second quarter 2024 earnings conference call and webcast on July 19, 2024, at 11:00 a.m. EDT. Interested parties may access the conference call by dialing 1-888-338-9469. The webcast can be accessed at ir.yourstatebank.com. An audio replay of the call will be available on the Company's website. About SB Financial Group Headquartered in Defiance, Ohio, SB Financial is a diversified financial services holding company for the State Bank & Trust Company (State Bank) and SBFG Title, LLC dba Peak Title (Peak Title). State Bank provides a full range of financial services for consumers and small businesses, including wealth management, private client services, mortgage banking and commercial and agricultural lending, operating through a total of 23 offices: 22 in nine Ohio counties and one in Fort Wayne, Indiana, and 23 ATMs. State Bank has six loan production offices located throughout the Tri-State region of Ohio, Indiana and Michigan. Peak Title provides title insurance and title opinions throughout the Tri-State region. SB Financial's common stock is listed on the NASDAQ Capital Market with the ticker symbol "SBFG". Forward-Looking Statements Certain statements within this document, which are not statements of historical fact, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, and actual results may differ materially from those predicted by the forward-looking statements. These risks and uncertainties include, but are not limited to, risks and uncertainties inherent in the national and regional banking industry, changes in economic conditions in the market areas in which SB Financial and its subsidiaries operate, changes in policies by regulatory agencies, changes in accounting standards and policies, changes in tax laws, fluctuations in interest rates, demand for loans in the market areas in SB Financial and its subsidiaries operate, increases in FDIC insurance premiums, changes in the competitive environment, losses of significant customers, geopolitical events, the loss of key personnel and other risks identified in SB Financial's Annual Report on Form 10-K and documents subsequently filed by SB Financial with the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made, and SB Financial undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made, except as required by law. All subsequent written and oral forward-looking statements attributable to SB Financial or any person acting on its behalf are qualified by these cautionary statements. Non-GAAP Financial Measures This press release contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles ("GAAP"). Non-GAAP financial measures, specifically pre-tax, pre-provision income, tangible common equity, tangible assets, tangible book value per common share, tangible common equity to tangible assets, return on average tangible common equity, total interest income – FTE, net interest income – FTE and net interest margin – FTE are used by the Company's management to measure the strength of its capital and analyze profitability, including its ability to generate earnings on tangible capital invested by its shareholders. In addition, the Company excludes the OMSR valuation adjustment from net income to report a non-GAAP adjusted net income level. Although management believes these non-GAAP measures are useful to investors by providing a greater understanding of its business, they should not be considered a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Investor Contact Information: Mark A. KleinChairman, President and Chief Executive Anthony V. CosentinoExecutive Vice President and Chief Financial SB FINANCIAL GROUP, INC. CONSOLIDATED BALANCE SHEETS - (Unaudited)                           June   March   December   September   June ($ in thousands)    2024     2024     2023     2023     2023                        ASSETS                     Cash and due from banks   $ 21,983     $ 26,602     $ 22,965     $ 19,049     $ 20,993   Interest bearing time deposits     2,417       2,417       1,535       1,180       1,180   Available-for-sale securities     208,156       213,239       219,708       212,768       227,996   Loans held for sale     7,864       4,730       2,525       3,206       5,684   Loans, net of unearned income     1,005,390       991,552       1,000,212       989,021       984,824   Allowance for credit losses     (15,612 )     (15,643 )     (15,786 )     (15,790 )     (15,795 ) Premises and equipment, net     20,860       20,985       21,378       21,934       22,230   Federal Reserve and FHLB Stock, at cost     5,204       6,512       7,279       6,261       7,634   Foreclosed assets and other assets     510       510       511       629       625   Interest receivable     4,821       3,706       4,657       6,673       4,079   Goodwill     23,239       23,239       23,239       23,239       23,239   Cash value of life insurance     30,294       30,103       29,121       29,291       29,183   Mortgage servicing rights     14,548       14,191       13,906       13,893       13,723   Other assets     12,512       13,869       11,999       15,120       15,840